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When a friend sent me this paper the other day, I admit that I took a
long hard look at myself and my economist friends. According to
this study, economists, it seems, are worse than most when it
comes to truth telling. This discovery was made by researchers
Raúl López-Pérez and Eli Spiegelman, who wanted to examine
whether certain characteristics (for instance religiosity or
gender) made people averse to lying. They measured the preference
for honesty by canceling out other motivations, such as altruism
or fear of getting caught.

The way they accomplished this was with a very simple experiment
where a pair of participants acted as sender and receiver of
information. The sender would sit alone in front of a screen that
showed either a blue or green circle. He or she would then
communicate the circle’s color to the receiver, who could not see
the color or the sender. Senders received 15 Euros every time
they indicated a green circle, and only 14 when they communicated
that the circle was blue. Receivers earned an even 10 euros
regardless of the color, and so were unaffected by either the
truthfulness or dishonesty of the senders.

So senders had four strategies:

1) Tell the truth when shown a green circle and get the maximum
payment;

2) Lie when shown a green circle, choosing a lower payment;

3) Tell the truth when shown a blue circle and receive the lower
payment;

4) Lie when shown a blue circle and gain an extra euro.

All was well and good if senders saw a green circle, telling the
truth earned them the maximum amount of cash (as you can imagine,
option 2) was fairly unpopular). What if they saw blue though?
Well, they had two options: tell the truth and lose a euro, or
lie and get paid more. The experimenters reasoned that a
lie-averse sender would always communicate the circle’s color
accurately while senders motivated by maximizing profit would
indicate green regardless.

Participants, who were from a wide array of socio-economic and
religious backgrounds, also came from a range of majors.
Researchers grouped majors together into business and economics,
humanities, and other (science, engineering, psych). The
results showed little difference in honesty as a factor of
socio-demographic characteristics or gender. A student’s major,
however, was a different story. As it turned out, those in the
humanities, who were the most honest of all, told the perfect
truth a little over half the time. The broad group of “other” was
a bit less honest with around 40% straight shooters. And how
about the business and economics group? They scraped the bottom
with a 23% rate of honesty.

Keep in mind that this was one study of one group of people;
however, it does indicate that the study of economics makes
people less likely to tell the truth for its own sake. And this
holds water, economically speaking: 1 euro has clear and
measurable value, it can be exchanged for a number of things. The
benefit of telling the truth in this situation does not carry any
financial value (which is not to say lying in finance is not
costly—clearly it is). But rationalization, which we all take
part in, may be easier for those who think in terms of
opportunity cost and percent profit.

This is not terribly surprising to me in the context of the
greater history of economics, which has been characterized by the
study of selfishness. The concept of the invisible hand (inherent
in the notion of self-correcting markets) holds that people
should act selfishly (maximizing their own profits) and that the
market will combine all of their actions with an efficient
outcome. While it’s true that markets can sometimes accommodate a
range of behaviors without failing, if we continue to teach
students the benefits and logicality of rational self-interest,
what can we really expect?